Components of Electrical Grids
The electric power system can be divided into five major components:
Fuel or renewable energy resources used to generate electricity
Generation of electricity
High-voltage transmission of the electricity (sometimes for long distances)
Distribution of the electricity to end users
Use of the electricity by the various kinds of electricity customers and their appliances.
Fuels primarily refer to non-renewable fossil fuels, like natural gas and coal, as well as nuclear fuel. Coal is the most prevalent fuel used to generate electricity, producing about 51% of U.S. electricity. The other fossil fuels are natural gas, which produces about 15% of U.S. electricity, and oil, which produces about 4%, for a total of about 71% of U.S. electric energy being derived from fossil fuels. Nuclear fuels are used to generate 19% of U.S. electricity, and renewable power sources — including hydropower, wind, and solar power — produce the remaining 10%. All of these generation methods are regulated by both federal and state laws. They all have environmental consequences, including air quality issues, water use and quality issues, land use issues, and impacts on fish and wildlife (see Environmental Considerations).
Generation of electricity(the conversion of fuel to electricity) is mostly done at large-scale power plants that create power in bulk, wholesale quantities. The siting of generating plants is regulated at the state level. Sale of wholesale power is regulated by the Federal Energy Regulatory Commission (FERC) under the Federal Power Act (because it is treated as a product subject to interstate commerce laws). Distributed generation (DG) is the localized use of generators to meet local needs (such as backup power, uninterruptible power supplies, or remote power). Diesel generators are currently the predominant form of DG. However, as technology advances, other forms of DG such as fuel cells, microturbines, wind turbines, and solar electric technologies are entering the field.
Transmission refers to the high voltage (above 230kV) network of poles and wires that transfer of large amounts of electric power over large distances. The sub-transmission system (power lines with voltages typically between 30kV and 230kV) further move the power to smaller, more regional load centers. Substations are the points of control for the high voltage electrical system where voltages are stepped up or down for movement onto other parts of the transmission system, and power is metered to determine the flow of electricity. Like generation, transmission policy is also governed by federal rules through the FERC. Siting of transmission lines is, however, a state and local concern.
Distribution applies to the lower voltage movement of power within one utility's system and the delivery of the power to customers. Distribution is under state control, and can be under tribal control. Ancillary services are the services required to monitor, meter, maintain and optimize the grid.
Treatment of customers is regulated by the state and could be regulated by tribes. Most jurisdictions divide customers into residential, industrial, commercial, and sometimes government rate classes, due to the different buying and usage patterns of those customer types. In some cases policies are implemented to subsidize the rates for certain classes of customers.
Other elements of the electrical system that impact the system but are not physical parts of the system include: financing of the utility infrastructure, commodity pricing and trading of energy products, regulation of energy use, and government incentives.